Category Archives: Impact Engine

Wow! Who can resist this? Take a look-see at this invitation from John Bueter, famous fly fishing personality.

I’ve printed the letter below along with recent local photos so you can see what’s going on over there. This is the perfect getaway for a Chicago entrepreneur! Check it out:

The ONE, The ORIGINAL, The ONLY

SALMON CAMP ‘18

A Tradition for 28 Years!

September 28-30

Well, kids, it’s THAT time of year again! The excitement of the season is overwhelming, as the River comes alive with HUGE fish. Our target species is the mighty King Salmon in the wild and scenic Pere Marquette River. This area is FLY RODS ONLY. No spinning gear. No snagging. No treble hooks welded to spark plugs.

Last season’s fish weighed in heavier than normal. This year they’re even LARGER, with documented catches off shore of 40+ pounds! Bring your big guns, Kids! We’ll be hosting festivities again at the Bueter Compound.

The 24 hour Campfire tradition continues, providing the backdrop for the usual hijinks, exchange of regional information (mostly lies), recounting of the day’s adventures (again, mostly lies), and permanent cementing of friendships. Campers are encouraged to use the showers to control the fly, bear, and buzzard problems.

The spirit of mentorism and camaraderie will flourish once again. Proven fly patterns, proven knots and rigging—all demonstrated. Maybe some new stuff, too. Be sure to bring your tying gear—you’ve got things to offer and learn!

We’ve manned the barbeque pit. All the usual suspects will again prepare a super-duper-up-north dinner Saturday night, and a breakfast that will revive the near-dead.

There’s always room for newbies—no matter your level of experience. Remember the founding concept of Salmon Camp: “This is too much fun to keep to ourselves!”

Lookin’ Forward to fishin’ with y’all !!!

Your Master of Salmon Mayhem,

John Bueter

Is that a compelling invitation or what? Wanna go? Well, yeah! I get to chase 40 lb salmon with a fly rod? Who wouldn’t want a thrill like that? Let’s go early!

I particularly like the legal jargon on their “catch and release” form:

“…Illegal substances, firearms, and spinning tackle are not welcome in Camp…Camp “crashers” will be found, drawn and quartered, and their hides nailed to the fence so as to discourage others. This Camp will go on rain or shine—NO WHINERS. We encourage good stewardship of our resources, and will not tolerate scofflaws.”

Never fly fished before? Neither did the gal who caught a 40 lb Chinook last year. Didn’t stop her. Oops—guess I just can’t keep a secret.

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Here’s the place:

Bueter’s Salmon Camp 3200 South James Road, north of Baldwin, MI 49304

Chicago’s startup scene has grown dramatically in recent years. That includes a rapid increase in local accelerators, incubators, tech parks, and similar programs.

The term accelerator is used somewhat loosely, but the prototypical accelerator involves cohorts of between 10 and 20 startups that spend three to four months in a common physical location. Accelerators are sponsoring organizations that provide startups with a combination of small cash investments, intense mentoring, formal and informal networking opportunities, and organized investor pitch events—all designed to dramatically “accelerate” a startup’s development. Typically, graduating companies immediately seek a significant angel investment or venture “A” round funding.

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The Big Three

Although small in number, accelerators form a significant part of the landscape in which Chicago-area angels operate. These programs support and foster entrepreneurs, drive media attention, and attract capital. In addition, a startup’s participation in an accelerator tells us something about the company. Techstars, which by most accounts is the premier Chicago accelerator, produces portfolio companies that are highly vetted, coached, and connected. Techstars companies raise an average of $1.5 million in outside capital after the program.

In addition, accelerators take an investment stake and a significant advisory role in their portfolio companies. This level of professional involvement may be a positive or negative factor in any particular angel investment opportunity. A company that graduates from an accelerator is typically relatively high quality but expensive from a valuation perspective.

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Everybody’s Got a Niche

More broadly, each accelerator program specializes in a particular field. Techstars focuses on web-based and software companies, Healthbox is for healthcare businesses, and Impact Engine companies address societal or environmental issues. These specialties point to trends in the startup market in general and give insight into the nature of a startup that was part of a particular accelerator.

Finally, accelerator programs conclude with a Demo Day. On that day, angel investors get the chance to view the current standard for well-coached startup pitches and identify potential investment candidates.

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Incubator vs. Accelerator

An incubator rents space and provides a central physical workspace to a dozen or two startups. The startup companies are often sponsored by an investor group or university. In contrast to accelerators, a company typically stays in an incubator on a long-term basis—until it needs to relocate to a larger facility. Mentoring and support varies, but is less intense than accelerators and generally comes from a sponsoring group, mentors brought in by the group, and other incubator companies.

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What about 1871?

Chicago’s best-known startup hub is 1871, located in the Merchandise Mart. It’s very successful in renting co-working space to startups, hosting classes and speakers, and generally raising the profile of entrepreneurship in Chicago. 1871 does not sponsor or invest in specific companies like an accelerator. But because of its massive size, incubators have sprung up within its walls. Even Venture Capital firms keep office space in the facility.

Michael Gardiner is an Angel Investor based in Chicago.

For more articles in this issue of NEWS FROM HEARTLAND download the PDF. [click here]

NEWS FROM HEARTLAND – the Journal of the Heartland Angels, is published quarterly as an information service to its members. Articles may be reproduced in full with attribution for educational purposes.

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link. This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

Chicago Social Enterprise Eyes a Trillion Dollar Market

“Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”— James Baldwin

Imagine your reaction if your bank charged you a 9% fee to write a check to your sister in Cleveland. You send $100, but she only gets $91.

It’s unthinkable. But if you’re a low-wage immigrant sending part of your wages to family in your native country, that’s standard procedure—just one of the ways you pay more for being poor.

But this isn’t an article about how immigrants get ripped off. It’s about vast piles of money.

Dubai is one of the world’s largest employers of foreign workers

Estimates vary, but there are currently well over 200 million people who work in one country

and send their earnings somewhere else. Rahier Rahman, Founder and CEO of Pangea, a Chicago-based global payments company, says “Remittances through formal channels in 2012 were estimated at $534 billion. Many experts believe that flows through informal channels double that estimate. We’re looking at a trillion dollar market.”

Do I have your attention yet?

Rahier Rahman – CEO

Between fees and the spread on exchange rates, the World Bank claims the average cost of an international transfer is 9.3%. Nine percent of a trillion dollars is a vast pile of money. Hell, any percent of a trillion dollars is a vast pile of money.

“And some markets are more competitive than others,” adds Rahman. “In corridors like Japan-to-China, fees can be as high as 20%.”

Now then. On the one hand we have millions of hard-working, poorly paid people getting the

Carson Junginger – Product Dev

shaft from the corporate banking establishment. On the other hand, we have vast piles of money. It’s a textbook opportunity for a social enterprise solution.

That’s where Pangea comes in.

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A textbook social enterprise solution

To review: a social enterprisegenerates its sustainable revenue and profit from a business model that achieves a social benefit. Startups from Chicago-based incubator Impact Engine are proving that profit-driven innovation can create solutions to some of the world’s direst problems.

Pangea is one of eight startups from Impact Engine’s first cohort. They’ve developed a new approach to money transfer that skips the entrenched, agent-based system. With a beta launch scheduled for later this year, Rahman doesn’t share many details, but says Pangea will work through existing retailers, online or mobile, will make funds available instantly, and will “help consumers save between 50% and 80% of what they’re paying now.”

Some perspective: Workers in the US remitted $22.4 billion to Mexico in 2012 —more than all foreign direct investment in Mexico—and incurred just over $2 billion in fees. Cutting those charges by half would put an extra billion dollars into the hands of 1.4 million Mexican working class families.

Workers transfer billions to Mexico every year. Workers in the US remitted $22.4 billion to Mexico in 2012

Money like that has what Rahman calls “a reverberating impact,” since earnings are so much lower in developing economies. What we Americans might consider spare change can create meaningful lifestyle changes for poor families in places like India or Latin America.

Bottom line—if Pangea succeeds, millions of people will lead better lives.

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Investors Won’t Do Badly, Either

Omar Khudeira – Engineering

Of the five Impact Engine startups to receive funding since December’s Investor Day , Pangea has closed the most to date—a $1 million angel round. “Our partners recognize and respect our mission,” Rahman says.

I imagine they also recognize and respect the profit potential of a company that seizes even a fraction of a percent of a trillion dollar market.

That’s not cynicism. That’s capitalism.

Pangea has identified an underserved market, determined a pain point, and built a solution.

Lamia Pardo – Marketing

Like any other startup, their success will make a few wealthy people even wealthier.

Unlike any other startup, their success will also make large numbers of poor people a little less poor.

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

Impact Engine – Part 8

By Jeff Segal – message therapist

Less than a year ago, I asked a prominent figure in Chicago’s startup community about local investors’ interest in the social enterprise model.

She told me flatly, “No one cares.”

Well, they care now. Six months after the first Impact Engine Investor Day, five of the eight members of the initial cohort have closed a round of funding. If you’re keeping score at home, that’s 62.5%, compared to 6% or less for startups in general, according to Forbes. Impact Engine and social enterprise are killing it – killing the competition.

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Surprise

Portapure, one of the first group of grads, builds individual water treatment devices for developing nations. The company recently closed angel funding worth potentially $300K. I didn’t see that one coming. What did I miss?

“Other filtration technologies aren’t specific to developing countries’ needs and environment,” says founder George Page. “They are high-end products developed for the first world, some with pumps that require electricity or batteries. They’re useless in developing countries. Portapure units work on gravity, with no complex mechanisms. Anyone with a 2nd grade education level can understand how to use them.”

Page explains that Haitians, who on average earn less than $1,000 a year, can spend as much as $3.50 a week on drinking water—but can buy a Portapure unit with a microfinance loan and pay it off in 4-5 months with the savings. With more than 4 million Haitians lacking access to clean water, that’s a promising market.

Before Impact Engine, Page says he was offered $50,000 for half of his company. It’s now valued at $4 million. He thanks Impact Engine “…for access to folks who understand that sustainable social impact is a true value-add, at the forefront of changing how business works.”

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Legitimacy for the Whole Social Enterprise Space

Collaborative Groupclosed on funding of $550K. They connect retail brands with artisans in the developing world—for example, a line of Rachel Roy/FEED handbags is now sourced from India. Founder Kathleen Wright describes the impact such projects create: “We’re employing five artisan groups, and they’re all now sending their kids to school. It really enables them to have different dreams for their kids and themselves.”

But it’s not all social impact—Wright projects that her revenues will double this year.

ThinkCERCA got funded to the tune of $490K and launches its platform this August. They provide curriculum and tools that teach the critical thinking and literacy skills essential to the new Common Core State Standards—standards 49 states already adopted—standards that nobody knows how to implement.

For starters, they’ll reach more than 5,000 students between grades 4 and 12 in both city and suburban school districts. “It helps teachers and kids collaborate and construct new knowledge,” says founder Eileen Murphy, “because you just can’t teach someone to write using multiple choice questions.”

Aside from its feel good vibe, Murphy points out a concrete advantage of the social enterprise model in the tech community: “The social impact focus makes a big difference (for a startup company) competing for engineers.”

Regarding Impact Engine, Wright says, “Chuck Templeton’s guidance—how can you put a price on that? It gives legitimacy to the whole social enterprise space.”

Murphy adds, “Their energy, intelligence, support, and influence can’t be replicated, no matter how brilliant you are or how hard you work.”

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Two More Funded

Asadi, which markets inexpensive feminine hygiene products in rural India, has since moved back to India to build and train its sales network of 100 female entrepreneurs.

Pangea —which, for reasons unstated, didn’t even pitch on Investor Day—has closed on more than $1 million to finance its multiplatform, worldwide money-transfer solution.

Elizabeth Riley, Impact Engine Program Manager, explains the kind of company that fits the incubator’s profile: “We don’t accept companies with a Buy-One, Give-One business model,” she says, referring to companies that just donate to charity every time someone makes a purchase.

That’s not the social entrepreneurship model. A true social enterprise creates its social benefit from the exact same business activity that generates its sustainable revenue. It’s a model that’s gaining credibility and winning converts, and the eight members of Impact Engine #1 are establishing Chicago as one of the world’s top social enterprise centers.

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

Impact Engine—Part 7

Loop Lonagan here with a real simple story. I’m at the CHICAGO CLEANTECH COMPETITION watchin’ ten green companies go head-to-head for the chance to move on to the international GCCA contest.

Hey, dis old world needs a good scrubbin’, doncha think? I’m here, trying to use my natural greed on somethin’ constructive fer a change. I glance around and see a company I know has da potential. We’re gonna hear some good stuff.

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Claire Tramm CEO

Lemme ask you a question:

If you could make your house energy efficient with no effort and get paid to do it, would you?

Effortless Energy is planning to make that happen. Here’s their offer:

Their experts figure out what your house needs. Then they find the contractors and do the work. You just sit back ‘n’ sip yer beer.

They pay for everything. They add insulation, plug air leaks—all the stuff that makes yer house comfortable and cheaper to live in.

Then they split the energy savings with you.

You get a nicer house, more money in your pocket every month, and you don’t plunk down any up-front money at all—nada.

With an offer like that, who wants to rob their bank account or take out a loan? Who wants to wait years fer da payback? Who wants to go through the hassle o’ hiring alotta contractors? This makes me smile, ‘cause now I ain’t gotta do them things no more.

And yer helpin’ the environment by doin’ it! Inefficient houses is a big part o’ da carbon footprint and there’s 120 million in the USA. Hey, that’s a $230 Billion opportunity fer Effortless Energy! This one looks like a winner to me!

I hear talk and read stuff—all kindsa complicated explanations about what they do, but it’s really a no-brainer. I got an old house. I want to work with these people. Don’t you?

Have a look-see at their video:

So’s I listen to nine other presentations. Some sound pretty terrific. Others don’t look like real companies. Now the distinguished judges is leavin’ to select the winners. Will they pick the best ones? Don’t make me laugh.

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Strange Goings On

The judges is leavin’ to vote on the winners and the audience just moved to the feeding trough. So I’m just sittin’ there when one judge—this delicate oriental lady—hangs back and asks Rong Mayhem to give back her business card. To me that shows good judgement.

But Rong holds it outa reach and asks, “Why do you put PhD at the end of your name?” Sheesh! I mean, why do you suppose? After summore o’ that kinda behavior, she stamps her foot and insists.

His response? “I’m gonna have to put you in my doghouse. That’s for people who give me trouble.” Actually, he used a different word than doghouse, but I can’t say that here.

So I finally speak up: “Rong, she hasta go do the judging. You wanna keep us here all night?” So he hands it over and things get back to normal for a while. Sometimes strange things happen at these events. It don’t bother me none and it’s kinda fun to watch.

When da judges finally file back in, they pick some pretty good companies, but my favorite ain’t one of ‘em. But who can tell what’ll happen when these ventures hit the real world? Here’s all of ‘em and da skinny on what they do:

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

The Lean Canvas

Remember when you wrote that 50 page business plan—the one that nobody actually read? Well, you never have to do it again! Now you can put it all on ONE PAGE.

It’s called the BUSINESS MODEL CANVAS, a.k.a. the LEAN CANVAS. It’s fast. It’s visual. It’s a living document. It’s the new tool of choice among startups, big business, and major universities.

I’m at my old school, taking in the big, all-day “entrepreneur@nu” conference and they just handed me the Canvas on a slick clipboard, complete with a dry erase marker. Want to see how it works in 2 minutes? Check out this cool video from the genius that developed the concept:

Here at Northwestern it looks like total commitment. All the departments are teaching the Canvas. This entire event actually feels like walking around the Canvas itself.

This new line of thought originated with Alexander Osterwalder. I remember when it became a huge subject on LinkedIn—people were struggling to find ways to implement his brilliant conception. Then books came out, refinements were made, and software got developed—some by Osterwalder and more by a number of other people like Steve Blank and Ash Maurya.

Everybody’s got a slightly different slant on the details but they all reach the same goal—incredible efficiency and flexibility. Check out the weblinks below. You can find lots more if you look around.

I’ll be back later with more new thinking and just who won all the money at e@nu.